Praise be to Allah.
Apart from the Zakah that is required to be paid at the end of Ramadan (Zakat Al-fitr), Zakah is one of the five pillars of Islam.
The first is Zakah on wealth, which is only required for specific types of wealth, specifically:
Livestock: sheep, cattle, and camels
Silver and gold as well as modern paper money
Trade products
What the earth produces, comprising of two elements:
Fruits and crops. The scholars disagreed on other sorts, but they all agreed that Zakah must be paid on four types of grains: wheat, barley, dates, and raisins.
Rikaz, or “buried treasure,” is the wealth of the unbelievers that a Muslim discovers buried beneath the earth.
Zakat Al-Mal, often referred to simply as Zakat, holds a significant place in Islamic financial principles. It is one of the Five Pillars of Islam, emphasizing the importance of charity and social responsibility. This article aims to provide a thorough exploration of Understanding Zakat Al-Mal, covering aspects such as Nisab, the calculation and payment process, the recipients of Zakat, and the broader significance of this practice in the context of Islamic finance.
I. The Concept of Zakat Al-Mal
Zakat Al-Mal is an obligatory form of almsgiving in Islam, representing a systematic approach to wealth purification and societal welfare. The term “Zakat” is derived from the Arabic root word meaning ‘to purify’ or ‘to cleanse.’ This purification is not merely a financial act but also a spiritual one, emphasizing the cleansing of one’s wealth to foster gratitude, humility, and compassion.
II. Nisab: The Threshold of Wealth
Before delving into the mechanics of Zakat, it’s essential to understand the concept of Nisab. Nisab is the minimum threshold of wealth that makes an individual liable to pay Zakat. It serves as a standard to differentiate between those who are obligated to contribute and those who are not.
The Nisab is primarily based on the value of gold and silver. Islamic scholars have set specific amounts for both gold and silver, and individuals whose wealth surpasses this value are required to pay Zakat. The determination of Nisab ensures that Zakat is obligatory for those who possess a reasonable amount of wealth, while exempting those with limited financial resources.
III. The Calculation of Zakat
Calculating Zakat is a meticulous process involving the assessment of various assets, including cash, gold, silver, and other valuables. The standard practice is to contribute 2.5% of one’s eligible wealth as Zakat. However, the specific rules for different types of assets may vary.
For cash holdings, the entire amount is subject to Zakat. When it comes to gold and silver, the calculation is based on the weight of the precious metals owned. Additionally, business assets, agricultural produce, and other forms of wealth are considered in the overall calculation.
The minimal naqd (gold and silver) that the Shari’a specifies below which a person is exempt from paying zakat; if a person’s wealth is above this threshold, zakat becomes mandatory. This is known as Nisab ul-Zakat.
Furthermore, it is well recognised that the two forms of naqd—gold and silver—as well as what is popularly referred to as cash in modern times—whether it be dollars, riyals, pounds, or another currency—require zakat ul-maal (wealth) under Islamic law.
How the prophet (PBUH) calculated
According to our Prophet (peace be upon him), the nisab for gold (as well as for currencies made of gold) is 20 mithqaalan, or 85 grams of pure gold (1 mithqaal = 4.25 grams). Anyone who holds such an amount in any form to pay zakat on it in the amount of 2.5%
Nisab for silver and currencies made from silver is 200 dirhams, which is equivalent to 595 grams of pure silver (1 dirham = 2.975 grams). Similarly, it becomes mandatory for any individual possessing such a sum to pay 2.5% zakat on it.
It is often recognised that the value of nisab for gold and silver in present day and age differs noticeably. The best and most conservative for a poor person is to assess how many dollars he has that have been in his possession for a complete lunar year (Hijri, which is 354 days). If the amount reaches the value of nisaab for silver or more, then he should pay from it for every 1000 dollars, 25 dollars (i.e., 2.5%) to be spent in the prescribed benficiaries as specified by shari’ah. We ask Allah to assist us and help us succeed in the right path.
IV. The Process of Paying Zakat
Paying Zakat is a conscientious act that involves careful consideration of one’s financial situation. Muslims are encouraged to pay Zakat on an annual basis, typically during the month of Ramadan. The process includes:
- Determination of Eligibility:
Individuals assess their wealth to determine whether it exceeds the Nisab threshold. - Calculation of Zakat:
After identifying eligible assets, the next step is to calculate Zakat based on the prescribed percentage. - Distribution to the Needy:
Zakat is then distributed to specific categories of recipients, as outlined in Islamic teachings.
V. Recipients of Zakat
Zakat is intended to benefit specific groups of individuals, ensuring the equitable distribution of wealth within the Muslim community. The Quran categorically mentions eight groups eligible to receive Zakat, including:
- The Poor (Al-Fuqara)
- The Needy (Al-Masakin)
- Those in Debt (Al-Aamilin)
- Zakat Collectors (Al-Mu’allafatu Qulubuhum)
- Those Joining Islam (Al-Mu’allafatu Qulubuhum)
- Slaves Seeking Emancipation (Fi-Riqab)
- Those in the Path of Allah (Fi-Sabilillah)
- Wayfarers (Ibnu Sabil)
The systematic allocation of Zakat to these categories ensures that the entire spectrum of society benefits from this form of charity, promoting social harmony and economic justice.
VI. Significance of Zakat in Islam
Zakat plays a pivotal role in Islamic finance and society for several reasons:
- Wealth Redistribution:
- Zakat ensures the equitable distribution of wealth, preventing the concentration of resources in the hands of a few.
- Social Welfare:
- By supporting specific groups in need, Zakat fosters social welfare and communal solidarity, reinforcing the principle of caring for one’s fellow human beings.
- Spiritual Growth:
- The act of giving Zakat purifies one’s wealth and soul, fostering humility, gratitude, and a sense of responsibility toward others.
- Economic Justice:
- Zakat serves as a mechanism to address economic disparities and promote justice, aligning with the Islamic principle of a just and ethical economic system.
VII. Challenges and Contemporary Practices
In the modern context, the implementation of Zakat faces various challenges. The complexities of financial systems, diverse forms of wealth, and the global nature of contemporary economies require thoughtful consideration. Islamic scholars and financial experts continually engage in discussions to adapt Zakat practices to the evolving economic landscape, ensuring its relevance and effectiveness.
Moreover, the emergence of Zakat foundations, charities, and digital platforms has facilitated the collection and distribution of Zakat funds on a broader scale. These initiatives leverage technology to streamline the process, making it more accessible and efficient for Muslims worldwide.
VIII. Conclusion
Zakat Al-Mal stands as a fundamental pillar of Islamic finance and a testament to the values of compassion, charity, and social responsibility in Islam. Understanding the intricacies of Zakat Al-Mal, including Nisab, calculation methods, and the diverse categories of recipients, provides insight into the comprehensive nature of this financial obligation.
As Muslims navigate the complexities of the modern financial landscape, the principles of Zakat offer a timeless guide for achieving economic justice, promoting social welfare, and cultivating spiritual growth. By upholding the practice of Zakat, individuals contribute to the establishment of a just and compassionate society, embodying the core teachings of Islam in their financial actions.
